Auditors: Veterans Affairs overpaid disabled vets

(USA TODAY) -- Inspectors say the most stubborn, chronic mistake made by Veterans Affairs
claims examiners while trying to dig their way out of a growing backlog of cases
is overcompensating some veterans.

The Department of Veterans Affairs overpaid 12,800 veterans $943 million from
1993 to 2009, according to projections by the VA's Office of Inspector General.
And if the error isn't corrected, inspector general auditors said another $1.1
billion could be wasted by 2016.

The VA says the projections are significantly overstated, but is fixing the
problem. The House Veterans Affairs Committee plans to hold a hearing on the
issue in February.

The mistakes occur in a narrow batch of cases where veterans temporarily
receive a 100% disability rating while undergoing surgery or debilitating
treatments and convalescing.

Claims examiners have repeatedly failed - often in two out of three sampled
cases - to seek a follow-up medical exam to determine if the veteran's condition
has improved and the temporary 100% disability rating should be reduced
accordingly, inspectors said. The results are veterans who improve or recover,
but receive hundreds of thousands of dollars in compensation over years for a
level of disability they no longer have, inspectors said.

"That (rating) will run forever until somebody like us stumbles upon it,"
said Brent Arronte, a director of inspections.

The 100% rating legally bars the VA from recouping overpayments that
inspectors say have occurred, the department said.

A common error involves cancer treatment where the disease stabilizes or goes
into remission, according to inspector general reports. In one case, a veteran
who improved after being treated for non-Hodgkin lymphoma was overpaid $237,000
over 71/2 years until the mistake at a Cleveland VA office was caught by
inspectors, according to a September report.

Inspectors said that claims examiners either fail to schedule follow-up exams
when the disability rating is put in place, or fail to act when alerted that one
is necessary.

"We're a little frustrated," Sondra McCauley, deputy assistant inspector
general for audits and evaluations, said of the overpayments. "It's a human
error thing."

Inspectors say one challenge is growing workloads for claims examiners.
"People have told us there is some pressure for them to meet their production
goals," Arronte said.

The VA said fixes were put in place last July to help ensure follow-up exams
are scheduled. In addition, the claims process is to become fully automated this
year and claims examiners will automatically be alerted that exams may be
necessary, said Lois Mittelstaedt, VA benefits administration chief of
staff.

"We don't want any more (payments) slipping through the cracks that we find
10 years later we should have stopped," said Thomas Murphy, VA compensation
service director. "There's a lot of taxpayer dollars at risk here and we want to
make sure we get the process right."

A January 2011 inspector general audit first projected more than $1 billion
would be lost over five years if the temporary disability problem was not fixed,
and all 42 regional office inspections since then still show errors.

VA claims examiners handled 1.1 million compensation requests last year and
took an average of 260 days to complete cases. The VA pays out about $40 billion
a year in compensation to veterans for service-connected disabilities.

"When you're projecting $1.1 billion over the next five years could be spent
on inaccurate benefits," said Linda Halliday, assistant inspector general for
audits and evaluations, "That's a lot of money ... (that) could potentially be
used to serve other veterans' benefits."